The fact that Canon is (presumably) going ahead with this entry level DSLR indicates to me that Canon still sees a market for it.
Some had surmised that the entry level portion of the ILC market would be the first category susceptible to takeover by mirrorless. But Canon must still be selling alot of these.
At this point, Canon is pretty much the only game in town for entry level DS,LRs. If the other manufacturers are going to leave those chips on the table, Canon might as well pick them up.
Yet even Canon has slowed down the refresh rate of their mid-entry level Rebels.
Look at the longevity of each model in that series before the replacement was introduced. Canon tends to keep the two most recent xx0D models in their active catalog, with the older of the two dropping off when another model is introduced. The Rebel T4i/650D was an anomaly that had problems with the rubber panels on the exterior turning white after being exposed to human perspiration, and a few people had allergic reactions to the material used. There wasn't much difference between it and the Rebel T5i/700D other than the material used in the rubber panels.
Digital Rebel/300D: 18 months
Rebel XT/350D: 18 months
Rebel Xti/400D: 19 months
Rebel XSi/450D: 14 months
Rebel T1i/500D: 11 months
Rebel T2i/550D: 12 months
Rebel T3i/600D: 16 months
Rebel T4i/650D: 9 months
Rebel T5i/700D: 23 months
Rebel T6i/750D: 24 months
Rebel T7i/800D: 36 months and counting until the official announcement of the T8i/850D...